topic We took out a HELOC at the start of 2020 to do improvements. When interest rates started rising, we did a refi on home, paid off the HELOC, can we deduct refi interest? in Deductions & credits

We took out a HELOC at the start of 2020 to do improvements. When interest rates started rising, we did a refi on home, paid off the HELOC, can we deduct refi interest?

chopped58 — Tue, 10 Feb 2026 11:15:57 GMT

The HELOC was used to improve home, it had a variable interest rate, in 2022, we thought it was better to refi mortgage, and pay off the HELOC. Technically the refi was not taken out directly to improve home, but payoff the loan that was. Can we deduct the interest on the refi?

Re: We took out a HELOC at the start of 2020 to do improvements. When interest rates started risi...

DaveF1006 — Mon, 19 Feb 2024 18:42:38 GMT

No. You can no longer deduct the interest from a loan secured by your home to the extent the loan proceeds weren't used to buy, build, or substantially improve your home.

IRS Publication 936

Re: We took out a HELOC at the start of 2020 to do improvements. When interest rates started risi...

chopped58 — Mon, 19 Feb 2024 21:06:05 GMT

So your saying I can't deduct ANY mortgage interest? We have one mortgage, which includes the cost of the house, plus the HELOC added on? That means we've lost the mortgage interest deduction entirely?

Re: We took out a HELOC at the start of 2020 to do improvements. When interest rates started risi...

TomK2023 — Mon, 19 Feb 2024 21:15:12 GMT

For tax years 2018 through 2025, you can only deduct the interest from the amount of your loan that was used to buy, build, or improve the home that it’s secured by.

If you’ve ever used part of this loan to pay for things other than this home, you cannot deduct the interest from that amount of the loan, even if the transaction didn’t take place this year.